Social Security benefits are often confusing. You might say that “understanding Social Security” is an oxymoron! We recently received a client question regarding the complicated topic of a spouse’s Social Security claiming strategy before Full Retirement Age (FRA). The question was could his spouse start taking her own benefit early at age 62 and then switch to one-half of his at age 66?
Each person who qualifies for Social Security is eligible for the greater of either their own benefit or 50% of their spouse’s benefit. However, it is little understood that when someone files for their own benefit – at any age – the spousal benefit becomes “supplemental.”
The supplemental benefit is calculated based on FRA amounts and is the difference between 50% of the other spouse’s FRA benefit and the filer’s own FRA benefit. If that person files early (before FRA), then their benefit is reduced. Therefore, the total of the early filer’s reduced benefit plus their supplemental spousal amount will be forever less than the original 50% FRA amount they could have received.
Conclusion: It rarely makes financial sense to do this. It results in a permanent reduction in benefits even after adding the spousal benefit. If a couple are both long-lived, the lost dollars will add up.
If you have a unique situation and could use the expertise of a Certified Financial Planner, contact us!